Buenos Aires City in January doesn’t seem to be to that city of crazy traffic and people in a hurry like it is the rest of the year. During the summer, especially in January, almost all life of Argentina moves towards the summer centers and this is the time that the big cities take a break.

However, during the early days of this year 2015, in midsummer, the city was revolutionized. Visitors came from all over the world with their flashy cars, trucks and other weird vehicles. That’s because since some years ago an important competition, that generates great interest in the region, is carried out in our country.

(Photo: Symbolic start of the Dakar Rally 2015 in Buenos Aires City)

I’m talking about the Dakar Rally, an annual competition which originally was from Europe to the city of Dakar, in Senegal, and since 2009 it was moved to the Southern Cone bringing cars, trucks, motorcycles and squads from around the world to tour the grounds sand, rock, mud and differents kinds of vegetation of the beautiful and varied landscapes of Argentina, Chile and Bolivia.

While for many people the Dakar Rally is a sport or a show, for those who organize and carry forward, it is an important project. And such is the case for Marcelo Ginestar, Project Manager of the Logistics Assistance of the Dakar, who tells us about this exciting challenge of which he is part since the first year than the Dakar took place in South America.

The Latvian Presidency of the EU, together with DG REGIO and the Regional Studies Association, organized a conference on the challenges for the reformed cohesion policy 2014-2020 that took place on 4-6 February 2015 in Riga. It aimed to bring together the academic and policy worlds to take stock of the challenges and opportunities for cohesion policy in 2014-2020.

This event was the second in a series of EU Cohesion Policy Conferences and was held at the University of Latvia in Riga. The conference sought to debate the challenges facing cohesion policy up to 2020 and the related policy and research priorities. It brought together three different constituencies – members of the EU institutions, Member State representatives and members of academia. The discussions were around 5 thematic blocks:

Economic geography and Cohesion policy: how are the economic and social challenges for European Structural & Investment Funds changing?

Institutions and governance: what can Cohesion policy do to strengthen public administration and effective management of the Funds?

Performance and results: how can Cohesion policy resources be used most effectively and efficiently?

Instruments: what kind of Cohesion policy interventions makes a difference?

EU economic governance and Cohesion policy: what are the implications of governance reforms for Cohesion policy?

Cohesion Policy is financially the most intensive EU policy and aims to reduce disparities between EU regions. The objective of the new Cohesion Policy 2014-2020 is to promote the achievement of “Europe 2020” goals and allocate financing to underlying priorities – innovations, business support, employment and modern public administration.

Discussions focused on understanding the current situation in Member State programming particularly how the principles of Cohesion policy are being translated into practice and highlighting the importance of good governance and administrative capacity. Many of the workshops focused on ‘what works in cohesion policy’ – the effectiveness, relevance and utility of Structural and Investment Funds at EU level and in individual countries and regions, especially in addressing the goals of Europe 2020 and dealing with pressing challenges such as youth unemployment.

It was highlighted that building robust systems to measure performance is a challenge for both academics and policy makers, including assessing the impact of the policy for which a multiplicity of approaches is essential given the broad range of areas of intervention.

Emīls Pūlmanis is a member of the board of the Professional Association of Project Managers in Latvia and Deputy Director of the Project Implementation and Control Department at the State Regional Development Agency of Latvia. He has gained a BSc. in engineer economics, a professional master’s degree in project management (MSc.proj.mgmt) and currently is a PhD candidate with a specialization in project management. He has elaborated and directed a number of domestic and foreign financial instruments co-financed projects. He was a National coordinator for a European Commission-funded program – the European Union’s financial instruments PHARE program in Latvia. Over the past seven years he has worked in the public administration project control and monitoring field. He was a financial instrument expert for the Ministry of Welfare and the European Economic Area and Norwegian Financial Mechanism implementation authority as well as an expert for the Swiss – Latvian cooperation program as a NGO grant scheme project evaluation expert. He has gained international and professional project management experience in Germany, the United States and Taiwan. In addition to his professional work, he is also a lecturer at the University of Latvia for the professional master study program in Project management. Emīls has authored more than 25 scientific publications and is actively involved in social activities as a member of various NGO’s. Emīls can be contacted at [email protected].

PMI (Project Management Institute) has selected the PMI Madrid Spain Chapter as “host” for the 2015 regional meeting for Region 8, that groups all European Chapters plus some from Asia. They expect more than two hundred volunteers, Chapter leaders from all European Chapters to attend that meeting.

Madrid has been the selected city, where that meeting will be happening on November 20th, 21st and 22nd 2015.

The meeting’s main purpose is:

Sharing experiences

Learning from others

Dialog

Listening to other’s best practices

Those meetings encourage the leadership behavior among all Region 8 PMI Leaders. This event, a mix between “learning, orientation and networking”, will count on the participation, as keynote speakers, from different Chapter Leaders who will share their local experiences. It will count on PMI Corporate Representatives and PMIEF (Project Management Educational Foundation) that will present the “Project management benefits for Social good”. No one leader should miss this meeting every year.

PMI Madrid Chapter, led by Mr. Francisco Javier Rodriguez (PMI Madrid Chapter President), will help and support PMI in all the organization and logistics for the event. Such events that are usually celebrated since ten years ago, are a great opportunity to improve the teamwork efforts among all PMI European leaders.

Alfonso Bucero, MSc, PMP, PMI-RMP, PMI Fellow, is an International Correspondent and Contributing Editor for the PM World Journalin Madrid, Spain. Mr. Bucero is also founder and Managing Partner of BUCERO PM Consulting. Alfonso was the founder, sponsor and president of the PMI Barcelona Chapter until April 2005, and belongs to PMI’s LIAG (Leadership Institute Advisory Group). He was the past President of the PMI Madrid Spain Chapter, and now nominated as a PMI EMEA Region 8 Component Mentor. Alfonso has a Computer Science Engineering degree from Universidad Politécnica in Madrid and is studying for his Ph.D. in Project Management. He has 29 years of practical experience and is actively engaged in advancing the PM profession in Spain and throughout Europe. He received the PMI Distinguished Contribution Award on October 9th, 2010 and the PMI Fellow Award on October 22nd 2011. Mr. Bucero can be contacted at [email protected].

Welcome to the March 2015 edition of the PM World Journal (PMWJ). This 32nd edition of the Journal is another full issue, containing 31 articles, papers, reports and book reviews by 36 different authors in 15 different countries. An additional 30+ news articles about projects and project management around the world are included. More than 20 countries are again represented by authors or subjects this month. The primary mission of the journal is to support the sharing of knowledge and information related to program and project management (P/PM), so please share this month’s edition with others in your network.

Invitation to Share Knowledge

We invite you to share your knowledge and experience (and stories) related to program and project management. A wide variety of articles, papers, reports, book reviews and news stories are included in the PMWJ each month. Share knowledge and gain visibility for you and your organization; publish an article, paper or story in the PMWJ. See our Call for Papers in the news section of the PMWJ this month; if interested in submitting something for publication, check out the Author Guidelines for the journal. Then just email your original work to [email protected].

This month in the Journal

We begin this month with 3Featured Papers by authors in three different countries. Trian Hendro Asmoro, Indonesian project management professional now studying in the UK, has authored a paper titled “Understanding Risk and Return in Bidder’s EPC Price using CAPM Concept.” Stephen Jenner in Australia has authored the paper titled “Why do projects fail and more to the point, what can we do about it?” Ramaz S. Issa in UAE is the author of “Managing Outsourcing Strategy in a Complex Project.” Featured Papers are serious, research-based contributions to the literature and field of professional P/PM, so read them now or flag them for reading later. The Jenner paper is on our current hot theme of project failure and success.

One Featured Interview is included this month. PMWJ managing editor David Pells was interviewed in late January by Petek Kabakci of the PMI Turkey Chapter in Istanbul. That interview was published in their eNewsletter in February; it is republished here. We hope you like the answers to Petek’s good questions.

6Series Articles are included this month, by 9 authors in 5 different countries. Alan Stretton, PhD (Hon), AIPM Fellow in Australia is back with the 4th article in his series on the topic of “Project Successes and Failures.” This month’s article is titled “Approaches to improving Level 2: ‘Project’ Success.” Don’t miss this new article on one of the most important topics facing the global P/PM profession – why projects fail or succeed.

David L. Pells is Managing Editor of the PM World Journal, a global eJournal for program and project management, and Executive Director of the PM World Library. David is an internationally recognized leader in the field of professional project management with more than 35 years of experience on a variety of programs and projects, including energy, engineering, construction, defense, transit, high technology and nuclear security, and project sizes ranging from several thousand to ten billion dollars. He has been an active professional leader in the United States since the 1980s, serving on the board of directors of the Project Management Institute (PMI®) twice. He was founder and chair of the Global Project Management Forum (1995-2000), an annual meeting of leaders of PM associations from around the world. David was awarded PMI’s Person of the Year award in 1998 and Fellow Award, PMI’s highest honor, in 1999.He is also an Honorary Fellow of the Association for Project Management (APM) in the UK; Project Management Associates (PMA – India); and Russian Project Management Association SOVNET. From June 2006 until March 2012, he was the managing editor of the globally acclaimed PM World Today eJournal. He occasionally provides high level advisory support for major programs and global organizations. David has published widely, spoken at conferences and events worldwide, and can be contacted at[email protected].

David L. Pells is Managing Editor of the PM World Journal and Executive Director of the PM World Library. David is an internationally recognized leader in the field of professional project management with more than 35 years of experience on a variety of programs and projects, including energy, engineering, construction, defense, transit, high technology and nuclear security, and project sizes ranging from several thousand to ten billion dollars. He has been an active professional leader in the United States since the 1980s, serving on the board of directors of the Project Management Institute (PMI®) twice. He was founder and chair of the Global Project Management Forum (1995-2000), an annual meeting of leaders of PM associations from around the world.

David was awarded PMI’s Person of the Year award in 1998 and Fellow Award, PMI’s highest honor, in 1999. He is also an Honorary Fellow of the Association for Project Management (APM) in the UK; Project Management Associates (PMA – India); and Russian Project Management Association. He is an honorary member of the Project Management Association of Nepal since 2010. From June 2006 until March 2012, he was the managing editor of the globally acclaimed PM World Today eJournal. He occasionally provides high level advisory support for major U.S. government programs and global organizations. David has published widely, spoken at conferences and events worldwide, and can be contacted at [email protected].

This interview was conducted via email in late January 2015 by Petek Kabakci, PMP, PMI TR Communications Director and Editor of PMI TR E-Newsletter.

Before answering questions, David offered a few introductory comments:

Thank you for the opportunity to speak with you. I have had four occasions in the past to visit Turkey. In 1994, I returned to the USA from a business trip to Russia via Sochi and Istanbul. I had an opportunity to spend a few days in Istanbul at that time, acting as a tourist and visiting some of the most famous sites, meeting my friend Ahmet Taspinar for lunch and a walk along the Bosporus, and falling in love with the city.

I returned three more times over the years to speak at conferences, the most recent during the IPMA World Congress in Istanbul in 2010. Having a little knowledge about and a lot of interest in Istanbul and Turkey, I have followed economic, political and professional developments there over the years. Based on Turkey’s location, size, history, economic trends and other factors, I expect Turkey to be one of the most influential countries in the world during the 21st Century.

Now to your questions,

Petek Kabakci: How do you see future trends in project management?

David Pells: Thank you for this question, which is actually not so easy to answer. First, there is the obvious trend of continued growth of the project management (PM) field as more programs and projects are launched, more organizations recognize the benefits and implement modern PM, and the visibility of the PM profession continues to increase worldwide. Programs and projects exist in every organization now, so the increased adoption of enterprise project management and project portfolio management is also both natural and widespread. More organizations, and entire industries, are being recognized and labeled as project-based, project-oriented or project-focused. The demand for project managers and project management professionals will continue to grow everywhere.

Secondly, the topics within the PM field will continue to increase. Just as PM has been recognized as very similar to general (executive) management, so will the range of responsibilities and requirements continue to expand to reflect that perspective. For example, the team responsible for a greenfield project of any kind must act as general manager for that enterprise, developing and implementing administrative, financial, human resources, operational and other systems, all while planning and implementing the project. In a similar context, project managers and entrepreneurs are engaged in similar activities, those associated with the launch of a project or the launch of a new product or business.

Editor’s note: This interview was conducted via email by Ms. Petek Kabakci on behalf of the PMI Turkey chapter (PMI TR) in January 2015, and subsequently published in the PMI TR eNewsletter in February. The interview was coordinated by İpek Sahra Özgüler, PMWJ correspondent in Turkey. More about the PMI Turkey chapter can be found at http://www.pmi.org.tr/c7/. The interview is republished here with approval of the PMI Turkey chapter.

This is the fourth article of a series on project successes and failures. The first two articles (Stretton 2014j, 2015a) looked at levels and criteria for project successes/ failures, at success/ failure rates, and at causes of project failures. There was a paucity of data available on these topics, and no agreed criteria for establishing project successes/failures. These articles concluded that there was an evident need to establish and agree on success and failure criteria for projects; to develop comprehensive success/failure data covering all significant project management types and application areas; and to develop much more comprehensive and validated data on causes of project failures.

The two most prominent cause-of-failure groups were project-initiation-related causes, and project management (PM) operational-related causes, which together comprised 70% of all causes of failure found. Their prominence invited further investigation, which is being done by linking them with the three success levels for projects introduced in the first article.

The third article (Stretton 2015b) discussed links between both cause-of-failure groups with Success Level 1: “Project management” success – “doing the project right”. It also discussed strong connections between Level 1 and Success Level 2: “Project” success – i.e. “doing the right project”. This article extends discussions of the latter. (Success Level 3: “Business” success, will be discussed in the fifth article).

By far the strongest linkage with Level 2 success comes from project initiation-related causes of failure, for the rather simple reason that failure to do the right project invariably derives from certain types of failure in project initiation phases.

This linkage is illustrated in Figure 4-1, which is a copy of Figure 2-2 from the second paper of this series

The third article of the series began developing the case for project managers to be fully involved in project initiation activities. This case is further developed below, together with approaches to increasing such involvement in the “project” success context.

Editor’s note: This series of articles on project successes and failures is by Alan Stretton, PhD (Hon), Life Fellow of AIPM (Australia), a pioneer in the field of professional project management and one of the most widely recognized voices in the practice of program and project management. Long retired, Alan is still accepting some of the most challenging research and writing assignments; he is a frequent contributor to the PM World Journal. See his author profile below.

About the Author

Alan Stretton, PhD

Faculty Corps, University of Management

and Technology, Arlington, VA (USA)

Life Fellow, AIPM (Australia)

Alan Stretton is one of the pioneers of modern project management. He is currently a member of the Faculty Corps for the University of Management & Technology (UMT), USA. In 2006 he retired from a position as Adjunct Professor of Project Management in the Faculty of Design, Architecture and Building at the University of Technology, Sydney (UTS), Australia, which he joined in 1988 to develop and deliver a Master of Project Management program. Prior to joining UTS, Mr. Stretton worked in the building and construction industries in Australia, New Zealand and the USA for some 38 years, which included the project management of construction, R&D, introduction of information and control systems, internal management education programs and organizational change projects. He has degrees in Civil Engineering (BE, Tasmania) and Mathematics (MA, Oxford), and an honorary PhD in strategy, programme and project management (ESC, Lille, France). Alan was Chairman of the Standards (PMBOK) Committee of the Project Management Institute (PMI®) from late 1989 to early 1992. He held a similar position with the Australian Institute of Project Management (AIPM), and was elected a Life Fellow of AIPM in 1996. He was a member of the Core Working Group in the development of the Australian National Competency Standards for Project Management. He has published over 140 professional articles and papers. Alan can be contacted at [email protected].

Cybercrime is a rapidly growing threat to the global economy. But it is not well-defined, and it is often confused with cyber-warfare or cyber-terrorism. Risk professionals need to understand cybercrime and its links to risk management, as we can provide valuable assistance in countering this significant threat to business and society.

Some risk professionals think cybercrime is only relevant to technical people and that it should be tackled by the IT departments. But cybercrime poses a significant risk to organisations because it affects their ability to achieve strategic and operational objectives. Unfortunately many businesses don’t know what cybercrime looks like, how likely they are to be affected, what the extent of the impact might be, or how best to manage it.

Cybercrime can affect an organisation in many different ways, including:

online theft or fraud

identity theft

extortion

theft of customer data

theft of intellectual property

industrial espionage

Exposure to cybercrime is related to the level of online activities undertaken by an organisation, including the scope of their online presence, the extent to which valuable assets and information are stored online, the strength of online security, and the degree of risk awareness in the organisational culture.

To manage the risk of cybercrime, we must first identify the level of our online activities, and determine which assets and activities might be affected by cybercrime. Then we can begin to identify, assess and manage our cybercrime risks.

Ben Rendle, MIRM, MAPM, MBA is an expert risk management consultant and an Associate with Risk Doctor & Partners (www.risk-doctor.com), offering specialist risk management consultancy and training. He is also Director of Riosca Limited, a risk management business based in the UK, providing a wide range of risk consultancy services. Ben has particular expertise in project and corporate risk management, and has worked for major clients in a variety of industries. He developed his risk consulting expertise over several years working with BAE Systems Detica, Deloitte and HVR Consulting Services. Ben has a particular interest and expertise in cyber-risk, and he co-authored the UK Cabinet Office “Cost of Cybercrime” report in 2011, which gathered considerable interest across academic and national media.

Ben’s recent clients include provision of long-term risk consulting support for Ministry of Defence IT security projects and a UK military equipment project. He has also performed capability reviews, IT systems audits and project risk audits for the Civil Aviation Authority (CAA), the Kuwait Investment Authority, VISA, and the Financial Services Authority.

Ben has UK security clearance at the highest level, and was chairman of the Detica Risk and Opportunity Management SIG. He holds a number of risk qualifications, including a Postgraduate Risk Diploma from the Institute of Risk Management, and the APM Project Risk Management Certificate (Level 2). He also obtained a Masters of Business Administration (MBA) degree from the University of Surrey. Ben can be contacted at [email protected]

This is the fourth and final installment in this article series that has focused on numerous aspects of organizational transition involved with introducing and maturing an organization’s program management discipline. Throughout the series we have detailed the story of a major U.S. contractor in the midst of a program management transition. This transition was led by Dave Mitchell, a senior V.P. for the company, and his PMO director, Nico Coachman.

Mitchell used the program management continuum to diagnose his organization’s program management performance relative to senior leader expectations (see Article 1). This diagnosis created an “Ah-Ha Moment” for him and his peers and created the impetus for change. The value of the continuum armed Mitchell and others with the realization that while making the decision to become more program-oriented was a straight-forward decision, making the transition from one level of program maturity to another was going to be much more difficult and therefore the role of Coachman as the transition agent was necessary for success (see Article 2). Mitchell and Coachman were successful with the transition in part because they focused on delivering business value (see Article 3). Beyond that focus, however, what else enabled their success?

Answering that question is the primary topic of this fourth article in the series. This article outlines the key success factors that must be managed to increase the probability of successfully when transitioning to a program-oriented organization.

Overcoming Program Management Transition Challenges

Organizational transformation is a challenging endeavor. Transitioning to a program-oriented organization is no different. The program management continuum introduced in article 1 is a tool that demonstrates the variations in the use of program management within companies today. At the center of the continuum is an important point – the point of transition. This is a philosophical decision point where the senior leaders of an organization make a purposeful decision to transition their organization from being primarily project-oriented to being program-oriented.

The PMWJ series of articles on program management is authored by Russell Martinelli, Tim Rahschulte and James Waddell, principle advisors at the Program Management Academy in Oregon, USA. More about the authors and the Program Management Academy can be found at http://www.programmanagement-academy.com/.

About the Authors

Russ Martinelli

Oregon, USA

Russ Martinelli is a senior program manager at Intel Corporation, one of the world’s largest semiconductor companies. Russ has many years of experience leading global product development teams in both the aerospace and computing industries. Russ is also a founder of the Program Management Academy (www.programmanagement-academy.com), and co-author of Leading Global Project Teams and the first comprehensive book on program management titled Program Management for Improved Business Results. Russ can be contacted at [email protected].

Jim Waddell, former PMO director in the high-tech industry, is a founder of the Program Management Academy (www.programmanagement-academy.com) where he consultants in program management and mergers & acquisitions. He has held a variety of management positions in the high tech and energy industries, has been a speaker at numerous conferences, and is a co-author of two books: Leading Global Project Teams and Program Management for Improved Business Results. Jim can be contacted at [email protected].

Tim Rahschulte is co-author of Program Management for Improved Business Results and an executive director at the Program Management Academy. Tim is also responsible for international management and leadership studies at George Fox University in Oregon. He consults with state governments in the USA on matters of organizational change as a business transition architect. Contact Tim at [email protected].

In our first article we promised to share with the readers of the PM World Journal our reflections and philosophy regarding project management education. That is, to share our thinking on project management as a professional discipline and on the role of educational institutions in promoting project management on a high academic level without compromising its practicality. In this second article we reflect on our own experience of designing and offering project management courses to undergraduate and graduate students.

In short, we regard project management—education, research, training and method—as a key success factor for human undertaking in all fields and sectors of society; and we believe that the modern university should do so too.

Just a few years ago, project management was considered a somewhat narrow and limited sub-managerial method used to plan and execute engineering undertakings, mainly military projects, construction, and product and/or software development. When one of us—the engineer—was an undergraduate in industrial- and mechanical engineering in 1989, project management was dealt with for two weeks as a small part of an elective course on management in general.

Obviously, this brief introduction only gave a shallow insight into project management; and gave a very limited insight into how to manage complex projects. This brief encounter was however enough to inspire a student majoring in engineering, and spark in him a curiosity about ‘human factors’ as ‘nice to know’ add-on skills to the more ‘need to know’ engineering skills required for the practical application of natural science.

Ten years later, the first whole course on project management was offered at the same university as a part of undergraduate studies in engineering. It was mandatory for students in industrial engineering, although only an elective for other engineering programs. The course focused on the project planning of single projects through careful assessment of requirements and the project environment. This course became very popular within the engineering program at the university.

Based on this interest and due to increased awareness and demand for training and education in project management a new graduate level course was developed. This course, which was an elective, had a wider perspective and aimed at showing graduate level students how project management is evolving towards becoming an overall management approach with a sharp focus on results and success, based on the deployment of sound engineering approaches and with state of the art management of people and context.

Editor’s note: This series of articles is by Professors Helgi Thor Ingason and Haukur Ingi Jonasson at Reykjavik University in Iceland. Active researchers and educators in the field of project management for many years, they are the authors of Project Ethics published by Gower (UK) in 2013. See their author profiles below.

About the Authors

Helgi Thor Ingason

Reykjavik, Iceland

Helgi Thor Ingason (b. 1965) holds a PhD in process metallurgy from the Norwegian University of Science and Technology (NTNU), MSc in mechanical and industrial engineering from the University of Iceland and a Stanford Advanced Project Management Certification from Stanford University. He is an IPMA Certified Senior Project Manager (B level).

Dr. Ingason is an associate professor at Reykjavik University. He is the head of the MPM – Master of Project Management – program at the university. The research fields of Dr. Ingason range from quality- and project management to system dynamics and renewable energy, production, transport and utilization, changes in the energy infrastructure and energy carriers of the future.

Dr. Ingason has reported on his research at conferences and in several reviewed conference and journal papers. He is the co-author of 6 books in the Icelandic language on project management, strategic planning, product development and quality management. He is also a co-author (with Dr Haukur Ingi Jonasson) of the book Project Ethics, published by Gower in January 2013.

Dr. Ingason was interim CEO of Orkuveita Reykjavikur (Reykjavik Energy) from 2010 to 2011. A co-founder of Nordica Consulting Group, Dr. Ingason is a management consultant and a recognized speaker. In his spare time he plays piano and accordion with Icelandic jazz and world music ensembles. More information on Dr. Ingason can be found on www.academia.edu. Information about the MPM program at the University of Reykjavik can be found at http://en.ru.is/mpm/why-mpm/. Dr. Ingason can be contacted at [email protected].

Haukur Ingi Jonasson

Reykjavik, Iceland

Haukur Ingi Jonasson (Cand. Theol., University of Iceland; STM, PhD, Union Theological seminary; clinical training in pastoral counseling, Lennox Hill Hospital; psychoanalytical training, Harlem Family Institute New York City) is an assistant professor and chairman of the Board for the MPM – Master of Project Management – program at Reykjavik University in Iceland.

He is also a psychoanalyst in private practice and a management consultant at Nordic Consulting Group ehf. As a consultant, his clients have included energy companies, banks, hospitals, the government and other public and private organizations. Dr. Jonasson is also a mountain climber and a member of the Reykjavik Mountaineering Air Ground Search and Rescue Squad. He is co-author with Helgi Thor Ingason of Project Ethics, published by Gower (UK) in 2013. Dr. Jonasson can be contacted at [email protected]

Share the post "Project Management Education: Once Upon a Time and Into the Future"

Mercedes Benz and BMW are brand names that immediately evoke images of quality, reliability and excellence. We try to emulate this mindset when developing training and certification products and services for our aspiring project management professionals.

In Germany, the IPMA 4-Level-certification system is used to certify project managers at different competence levels. The system is administered in Germany by GPM – German Project Management association through its certification body PM-ZERT.

ICB3 (IPMA Competence Baseline 3rdedition) is the standard against which an individual’s Technical, Behavioral and Strategic Competences are assessed. This article focusses specifically on IPMA Level D certification.

For these candidates, GPM supplies mandatory training materials that aim to support trainers as well as the participants in furthering knowledge and skills.

People, who commit to achieving the certification, want to enhance their knowledge by current standards so that they can apply it immediately to their professional settings. Furthermore, they wish to acquire both an overview of project management techniques and be able to use correct terminology.

They want to work more effectively in their projects, and eventually they want to advance in their careers as goal-oriented and confident project managers. A training programme in project management should also be considered as a personnel development plan.

Editor’s note: This series of articles is by members of the IPMA Education and Training (E&T) Board or other IPMA leaders on the subject of project management education, training, careers and related topics. More information about the IPMA E&T can be found at http://ipma.ch/education.

About the Author

Bärbel Häckel

Nürnberg, Germany

Bärbel Häckel, M.A. Organizational Development and Human Resources, Dipl.-Sozialpäd (FH) and Master of Systemic Consulting has worked for more than 10 years at the Technische Hochschule Nürnberg where she has established and has run the Transfer Center of Knowledge and Technology. She is well experienced in successful third-party-funding for different departments, in managing organizational projects and change projects.

She has also much teaching experience. Since 2012, she is the Manager of the Head Office of the GPM e.v., the German Member Association of IPMA®. Here, she is responsible for the general administration and organization as well as being project manager for the GPM Training and education products.

Stakeholder engagement is not an overhead and it is not discretionary! Your project is being done by one group of stakeholders for the benefit of another group of stakeholders. It is impossible to deliver a successful project without effectively engaging with your stakeholder community. The good news is the investment in stakeholder engagement is likely to be significantly less than the costs of dealing with problems and issues caused by not engaging with stakeholders effectively.

However, as with any investment in quality, assessing the return on investment (ROI) from effective stakeholder engagement is not straightforward. Determining the real ROI is a difficult question to answer accurately because no-one measures the cost of problems that don’t occur and very few organisations measure the cost of failure. This paper outlines one approach to calculating the ROI needed to support the business case for using a structured stakeholder management methodology within a business or project.

The stakeholder ROI problem is not unique; it is very difficult to value the benefits of an effective PMO, of improving project delivery methods (e.g., improving the skills of your schedulers), of investing in effective communication or of better managing risk. The costs of investing in the improvement are easily defined, but the pay-back is far more difficult to measure. However, just because something is not easy to measure, does not mean it is unimportant, meeting or exceeding stakeholder expectations is one of the primary definitions of project success.

There are two practical reasons why investing in effective stakeholder analytics is likely to deliver a valuable ROI:

By knowing who the important stakeholders are at any point in time, the expenditure on other processes such as communication can be focused where it is needed most, generating efficiencies and a ‘bigger bang for your buck’.

Stakeholders are a major factor in the risk profile of the work, their attitudes and actions can have significant positive or negative consequences and understanding the overall community provides valuable input to a range of processes including risk identification, requirements definition and schedule management.

At the most fundamental level, improving the management of stakeholders is directly linked to improving the quality of the organisation’s interaction with the stakeholders. The quality of the goods or services delivered to the end users or client (i.e., stakeholders) is improved as a result of being better informed of their requirements whilst undertaking the work.

Editor’s note: This series of articles on effective project stakeholder engagement is by Lynda Bourne, PhD, Managing Director of Stakeholder Pty Ltd (Australia) and author of the books Stakeholder Relationship Management and Advising Upwards, both published by Gower (UK). Dr. Bourne is one of the world’s leading authorities on program/project stakeholder relations. See her author profile below.

About the Author

Dr. Lynda Bourne

Melbourne, Australia

Dr. Lynda Bourne is Managing Director of Stakeholder Management Pty Ltd – an Australian based company with partners in South America and Europe. Through this global network she works with organisations to manage change through managing the relationships essential for successful delivery of organisational outcomes. Lynda was the first graduate of the RMIT University, Doctor of Project Management course, where her research was focused on tools and techniques for more effective stakeholder engagement. She has been recognized in the field of project management through her work on development of project and program management standards. She was also included in PMI’s list of 50 most influential women in PM.

She is a Fellow of the Australian Institute of Management (AIM) and a Fellow of the Australian Computer Society (ACS). She is a recognized international speaker and seminar leader on the topic of stakeholder management, the Stakeholder Circle® visualization tool, and building credibility and reputation for more effective communication. She has extensive experience as a Senior Project Manager and Project Director specializing in delivery of information technology and other business-related projects within the telecommunications sector, working as a Senior IT Project Management Consultant with various telecommunications companies in Australia and South East Asia (primarily in Malaysia) including senior roles with Optus and Telstra.

Dr Bourne’s publications include: Stakeholder Relationship Management, now in 2nd edition, published in 2009, Advising Upwards published in 2011, and Making Projects Work, published in 2015. She has also contributed to books on stakeholder engagement, and has published papers in many academic and professional journals and is blogger for PMI’s Voices on Project Management.

It is not uncommon to see good and experienced project managers make poor decisions that led to issues and eventually project failures. What is the explanation: misjudgment, lack of experience, or do some project managers just run out of luck? People make similar repeatable mental mistakes when they make choices, whether they are mothers trying to decide which is the fastest route to their children’s soccer match, or managers of large companies who are trying to decide which design they should use for their next product launch. These illusions are a primary source of human error in project management, errors that can eventually lead to project failures.

The Power of Illusions

Starting around 1995 a number of large computer companies including Oracle and IBM were involved in ambitious projects. They were trying to develop and market a range of diskless desktop computer devices, which Oracle called a Network Computer or a NC. The idea was quite revolutionary: if computer were mostly used to connect to the Internet, it does not require a very powerful processor, a CD-ROM, and even hard drives. Computers could be much cheaper than regular desktop computers were at the time: they could be priced at less than for less than $1000. Moreover, since the software was installed on the server rather than the NC, the user would not be required to maintain and upgrade it. Customers could have a computer that met all of their needs for a fraction of the cost. Despite all of its promise, the idea failed to materialize and NCs were not sold in significant enough quantities (Roth 2009). Why? For this project to succeed at least four conditions had to be met:

The price of regular PC computers must stay way above $1000 to ensure that NC would be competitively priced.

Widespread acceptance by consumers of the idea of network computing where central control was external, that is someone else on the server side would be in control of the system and even their data.

Let’s assume that probability of each condition that each condition be met equals 70%. At first glance 70% appears to be quite high and chances are promising. But taking a closer look we can see that there are several conditions that must be met, each of which has a 70% chance. Therefore project success is the product of all of the chances for each condition. It is 0.7*0.7*0.7*0.7 =~ 0.24. So, would you invest millions of dollars on a project with a projected chance of success of only 24%. The makers of the NC most likely faced a similar situation, but went ahead with the project anyway. Most likely because the executives of these companies were subject to an illusion, they thought that the chance of success was much higher. This illusion “overestimating the probability of conjunctive events” is quite common and behind many project failures.

With just this brief example, we can see that organizations are capable of acting quite irrationally, but just so you don’t think that this is an isolated case, here is another. In the 1980’s, the North Korean government was looking make a bold statement to the outside world that would illustrate the country’s industrial and technological power and attract much needed foreign investment. The government’s leader came up with a most audacious project – they would construct a building that would be the envy of the rest of the world, a hotel that would not only be the world’s largest, but one of the largest buildings of any type in the world, the Ryugyong Hotel. (Figure 1).

This enormous building was planned to reach a height of 1100 feet comprised of 105 floors. This project represented an investment of a significant percentage of the North Korean GDP (Hagberg, 2008), and would become the center piece of the North Korean’s governments efforts to showcase the success of their political and economic system and take some of the shine off of the economic success of their arch enemy South Korea.

As fate would have it, the project did not turn out to be the resounding success that the North Korean leadership had envisioned…

Editor’s note: Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English. Original publication acknowledged; authors retain copyright. This paper was originally published in the December 2011 edition of PM World Today. It is republished here with the authors’ permission.

About the Authors

Lev Virine, PhD

Intaver Institute

Alberta, Canada

Lev D. Virine, Ph.D. has more than 25 years of experience as a structural engineer, software developer, and project manager. He has been involved in major projects performed by Fortune 500 companies and government agencies to establish effective decision analysis and risk management processes as well as to conduct risk analyses of complex projects. Lev’s current research interests include the application of decision analysis and risk management to project management. He writes and speaks around the world on the decision analysis process, the psychology of judgment and decision-making and risk management. Lev can be contacted at [email protected]

Michael Trumper

Intaver Institute

Alberta, Canada

Michael Trumper has over 20 years’ experience in communications, software design, and project risk and management. Michael is a partner at Intaver Institute Inc., a vendor of project risk management and analysis software. Michael has authored papers on quantitative methods in project estimation and risk analysis. He is a co-author of two books on project risk management and decision analysis. He has developed and delivered project risk analysis and management solutions to clients that include NASA, DOE, and Lockheed Martin.

Eugenia Virine, PMP

Alberta, Canada

Eugenia Virine, PMP, is a senior manager for revenue development at Greyhound Canada. Over the past 12 years Eugenia has managed many complex projects in the areas of transportation and information technology. Her current research interests include project risk and decision analysis, project performance management, and project metrics. Eugenia holds B. Comm. degree from University of Calgary.

Much has been written on Black Swan type risks, sometimes treated as the risks from Unknown Unknowns. Do Black Swans inhabit the world of program management and are they truly Unknown Unknowns?

In 17th century Europe all observable swans were white and by extension all swans were therefore assumed to be white. No non-white swan had ever been observed.

In the 18th century, however, black swans were discovered in Western Australia and that discovery undermined the statistics of swans to that date. Previously, the “risk” of a Black Swan was essentially nil but upon recognition that the improbable was not the same as the impossible the possibility of Black Swans became more likely.

What had changed that made Black Swans more probable? Simply put our perceptions were broadened. In this article we will look at large programs, what creates the possibility of Black Swans and what are some of the new risks we must pay attention to.

Possibility of Black Swans

Program Management is very much about meeting the challenges of scale and complexity. These challenges largely focus on the management of known knowns and known unknowns.

But large programs by their very nature move into a new neighborhood where previously rare unknown unknowns are more prevalent. In effect, large program risks grow in new non-linear ways. What causes this growth?

Simply put:

Scale and complexity move you into a new neighborhood where black swans may be more common

Scaling drives non-linear and non-correlated growth in risks

Complexity masks existing risks

Complexity creates new risks

So what are Black Swans?

First they are outliers, beyond the set of expectations we have about allowable “value.” They are outliers since we believe we have no past experience to suggest the possibility. I emphasize the word “believe” here since I will later suggest that there is a reasonable expectation that large programs are “neighborhoods” that Black Swans visit.

Editor’s note: Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English. Original publication acknowledged; authors retain copyright. This paper was originally published in the January 2011 edition of PM World Today. It is republished here with permission of the author.

About the Author

Bob Prieto

Senior Vice President

Fluor

Princeton, NJ, USA

Bob Prieto is a senior vice president of Fluor, one of the largest, publicly traded engineering and construction companies in the world. He focuses on the development and delivery of large, complex projects worldwide. Bob consults with owners of large capital construction programs across all market sectors in the development of programmatic delivery strategies encompassing planning, engineering, procurement, construction and financing. He is author of “Strategic Program Management”, “The Giga Factor: Program Management in the Engineering and Construction Industry” , “Application of Life Cycle Analysis in the Capital Assets Industry” and “Capital Efficiency: Pull All the Levers” published by the Construction Management Association of America (CMAA) and “Topics in Strategic Program Management” as well as over 500 other papers and presentations.

Bob is a member of the ASCE Industry Leaders Council, National Academy of Construction, a Fellow of the Construction Management Association of America, a member of the World Economic Forum Global Agenda Council and several university departmental and campus advisory boards. Bob served until 2006 as a U.S. presidential appointees to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), working with U.S. and Asia-Pacific business leaders to shape the framework for trade and economic growth and had previously served as both as Chairman of the Engineering and Construction Governors of the World Economic Forum and co-chair of the infrastructure task force formed after September 11th by the New York City Chamber of Commerce. Previously, he served as Chairman at Parsons Brinckerhoff (PB). Bob can be contacted at [email protected].

There may be several reasons for project grouping. The best-known of them are achievement of an organization’s strategic goals (these project aggregates being called portfolios) or better management (for which we have programs). But sometimes it is natural to focus on another type of project sets. Consider a situation in which a project-oriented company invests in a new technology. The effects of such investments should be observable in projects applying this technology. So in order to fully analyze this project one should take into account the investment project and all commercial projects executed as an effect of the investment project.

Or looking from another point of view: consider a commercial project that delivers its products to a customer. When analyzing such a project one should take into account not only the project under consideration, but also all of the investment projects which made the execution of this project possible. There may also be other, non-financial reasons for collectively analyzing more than one project – like tracing changes in processes of project execution or tracing innovations introduced and used by projects. So there may be another reason for project grouping: analyzing them. This analysis in turn is performed for the purpose of better management of projects performed in an organization.

This paper describes project families, a way of grouping projects for analytical purposes originally presented by the author at the 22nd IPMA World Congress (Gasik, 2008).

Project parenthood relationship

Let us consider the following sets of related projects.

Example 1

A project-oriented organization carries out a project for an external customer. There are two goals of this project: earning income and proving to the customer that the performing organization is capable of doing subsequent, probably bigger, projects.

Evaluating the first project must be related to effects of follow-up projects.

There is a relationship between the first project and later-performed projects for this customer: the former enables execution of the latter.

Example 2

A company carries out a project of developing and implementing a software system for a customer. But there is also another aim of this project: developing a software library to be used in other projects.

Again, evaluation of the first project must take into account effects of the subsequent projects; at least the parts of them which directly use this software library.

There is a relationship between the first project and those using the software library. The former project influences the latter ones.

Editor’s note: Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English. Original publication acknowledged; authors retain copyright. This paper was originally published in the January 2009 edition of PM World Today. It is republished here with the author’s permission.

About the Author

Stanislaw Gasik, PhD, PMP

Warsaw, Poland

Dr. Stanisław Gasik, PMP is an adjunct professor at Vistula University in Warsaw, Poland. He holds M. Sc. in mathematics and Ph. D. in organization sciences (with specialty on project management), both from University of Warsaw. Stanisław has over 20 years of experience in project management, consulting, teaching and implementing PM organizational solutions. He has lectured at global PMI and IPMA congresses and other conferences. He was a significant contributor to PMI’s PMBOK® Guide and PMI Standard for Program Management and contributed to other PMI standards. His professional and research interests include public projects, portfolio management, project management maturity, and project knowledge management. He may be contacted at [email protected].

Share the post "Project Families and their Application for Project Evaluation"

Well, the weather is improving, days stretching out and activity is slowly picking up in the project world here in UK, so it must be nearly spring. In a long period dominated by the downturn in the oil price, many industries have reported a slow-down in new project start-ups as business cases have failed or shown reduced ROI or simply lack of benefits. News is beginning to come through that typical project ingenuity is emerging to find ways to get around some of the worst effects of the latest financial crisis.

Among major topics this month are redevelopment plans for south London, the latest on the Mars lander project, a look at a flagship Government project and recent events at the Association for Project Management.

REDEVELOPMENT IN LONDON

It seems like everywhere you look there are plans for new bridges across the River Thames. The last new bridge was completed for the Millennium Footbridge that spanned the river opening up views St Paul’s Cathedral from the South Bank and linked the then new Tate Modern to the City. There were problems to do with damping oscillations caused by pedestrian footfalls but these were soon overcome.

Readers will recall the proposals last year for the so-called Garden Bridge to cross the river from Temple Underground Station to a site just east of the National Theatre on the South Bank. The grandiose plan attracted a pledge of £30 million from London Mayor Boris Johnson, towards the projected £175 million overall cost of construction.

Critics were quick to point out a number of issues and The Guardian raised some of these:

how can the long-delayed plan for a Thames crossing in east London be revived? There are 16 road bridges west of Tower Bridge, but none to the east, where the city’s growth is burgeoning, until you hit the far-away Dartford crossing?

what has happened to the long-awaited plan for a pedestrian bridge at Nine Elms, where 20,000 new homes are being built?

why has a well-worked through scheme to make Victoria Embankment a pedestrian-friendly experience has simply fallen by the wayside?

Richard De Cani, Transport for London’s director of strategy and policy says Transport for London (TfL) is “scoping options” for the other projects, but he is reluctant to be drawn on why the Garden bridge – just 300 metres from an existing crossing – has been so magically fast-tracked and received such substantial public funding.

Then there is the money issue. The design was unveiled in June 2014 and reported to cost £60m. However, this had risen to £100m by July and was reported to be some £120m-£150m by the end of the year. The new cost at £175m, is “a genuine bottom line budget” covering aspects such as VAT and “real-estate issues”. According to Lord Davies of Abersoch, chairman of the Garden Bridge Trust, the bridge was always known to cost at least £150m. However, the Government has pledged £30 million to match the TfL funding.

The scheme received planning permission in November and work could start this year. The completion date of 2017 reported in some media seems to be in some doubt. As a legal challenge has been mounted over the whole scheme, an early start seems unlikely. Critics cite a wide range of issues, including the impact of closing Temple Station for a substantial period during construction, restrictions on use and access, dangers arising from crowding at events planned to help fund the construction and lack of clarity over finances, especially running costs expected to come in at about £3.5 million annually. The BBC noted (see their website http://www.bbc.co.uk/news/uk-england-london-29627906 for a full summary of opposition) the comparatively poor benefits case which comes in at 1:1.6 compared with other major projects in London, such as Cross Rail which comes in at 3.1:1 and the Victoria Line extension at 5.2:1. Local opposition is considerable and vocal.

Miles Shepherd is an executive editorial advisor and international correspondent for PM World in the United Kingdom. He is also managing director for MS Projects Ltd, a consulting company supporting various UK and overseas Government agencies, nuclear industry organisations and other businesses. Miles has over 30 years’ experience on a variety of projects in UK, Eastern Europe and Russia. His PM experience includes defence, major IT projects, decommissioning of nuclear reactors, nuclear security, rail and business projects for the UK Government and EU. Past Chair and Fellow of the Association for Project Management (APM), Miles is also past president and chair of the International Project Management Association (IPMA). He is currently Director of PMI’s Global Accreditation Centre and the Chair of the ISO committee developing new international standards for Project Management and for Program/Portfolio Management. He was involved in setting up APM’s team developing guidelines for project management oversight and governance. Miles is based in Salisbury, England and can be contacted at [email protected].

Ipek Sahra Ozguler has reported the latest news about project management from Turkey. This report is a contact point between Turkey and the world.

Today, I have a special guest. I’ m sure most of you had heard this name before. Dr. Al Zeitoun. He serves as Director at the 2015 PMI Board. His curriculum vitae on the PMI web page is as follows:

In his current role as the Corporate PMO Executive Director for Emirates Nuclear Energy Corporation (ENEC), Dr. Zeitoun’s impact includes creating the structure and discipline necessary for delivering on one of the largest projects in the Middle East, while building an enterprise portfolio and program management culture.

In 2007 Dr. Zeitoun was appointed by the PMI Board as a director-at-large. He chaired the Board nominating committee and volunteer appointment committee. He was past board member of the Accreditation Center, founder and past chair of PMI IDSIG, founder of the PMI Wichita, Kansas and MENA Chapters, as well as the chair of the PMI Central Indiana Chapter. Dr. Zeitoun was a keynote speaker at the 2014 PMI Turkey congress, the 2010 PMI® Global Congress in Brazil and at PMI Benelux Day in 2007. He continues to contribute to PMI standards.

Previously, as a Chief Projects Officer for International Institute for Learning, Inc. (IIL), Dr. Zeitoun was responsible for thought leadership and executing project management methodology. He was a key contributor to IIL’s 12-fold increase in global business size, and screened qualified IIL instructors to create a strong presence for the organization within global C-suites. He also has previous experiences in IT, manufacturing, construction and engineering.

Dr. Zeitoun holds PhD, MSc and BSc degrees in civil engineering; in addition, he received a diploma in project management from the University of Bremen.

In addition to his work with ENEC, Dr. Zeitoun continues to educate, such as his work at the University of Maryland. He enjoys spending time with family, traveling, tennis, reading and contributing to various transformation efforts.

İpek Sahra Özgüler graduated from the Istanbul University with the Bachelor of Science degree in Computer Engineering and from Middle East Technical University with an MSc degree in Software Management. She became a certified PMP in January, 2012 and a certified SCRUM Master in 2014. Ipek works as project portfolio manager at TAV IT Project Management Office. TAV IT is a core technology provider and systems integration company specialising in aviation. It delivers turn-key airport systems and infrastructure solutions for various parties at airports, including airport authorities, airlines and ground handling companies. Her main responsibility is to move the organization to the future by executing the organization’s strategy through portfolio management. Before joining TAV IT, she worked for global multinational companies and leading local companies such as Coca Cola, Deloitte, Turkcell Superonline and Havelsan. Over the years, she has gained extensive experience in managing various medium and large scale projects, programs and portfolios.

Her article named “When I Decided to Develop Multi Processing Project Manager’s System” published in the book “A Day in the Life of a Project Manager”. She has published several articles in the PM World Journal and one in PMI’s PM Network magazine. Ipek is actively involved in sailing, writing and discovering new cultures. She can be contacted at [email protected].

The beginning of the new year has been full of initiatives and events. The grand opening of Expo is approaching, less than three months to the start of the world most attractive event of 2015. In February it took place the meeting Idee per Expo, an initiative that has raised more than 500 experts around the world, who have participated in 42 working tables about the main themes related to the international exibition.

If Expo is now the present, the future will see once again the possibility to have Italy as protagonist of another major event. Luca Cordero di Montezemolo will be the Chairman of the Organizing Committee for the candidature of Rome to the Olympic Games of 2024. This is a new challenge for the Italian manager who has always been involved in sport initiatives.

Within the main news we also report about the renewal of the national board of IPMA Italy. The election saw the appointment of new figures from real excellence of industry and academia that will surely give new luster to the association. Definitely a big thanks to the outgoing President Roberto Mori for the excellent work done over the years both nationally and internationally.

Luca Cavone is a Consultant at JMAC Europe, the Consulting firm of the Japan Management Association. He is mainly focused to support companies in Innovation Management and Product Development Projects typical of R&D and Marketing areas, with an interdisciplinary background of the business processes. In JMAC Luca follows also the study and development of project management methodologies based on the application of Lean Thinking approach. Before joining JMAC he worked several years in the Aerospace industry. Since 2009 Luca has been actively involved with the International Project Management Association (IPMA); at that time he was between the founders of the Young Crew Italy and was appointed as first chairman. In 2011 he left the position to join the Young Crew Management Board, where he’s currently Head of Membership and Responsible for the Young Project Manager of the Year award. Since 2010 Luca is also a member of the Executive Board of IPMA Italy.

Luca is an international correspondent for PM World in Italy; he can be contacted at [email protected].

It’s almost an article of faith that somewhere between 50% and 70% of projects and programs fail. Studies by academics, professional bodies, consulting firms (and even Nobel Prize winners), paint a depressing picture of consistent and continuing failure. The issue appears to apply globally and to all sectors – for example, the UK National Audit Office (NAO) report that, “the evidence shows that two thirds of public sector projects are completed late, over budget or do not deliver the outcomes expected” and, “The track record of project delivery in the private sector is equally mixed.” The problem also seems to affect most categories of project or program, for example:

Business Change initiatives – “change remains difficult to pull off, and few companies manage the process as well as they would like…The brutal fact is that about 70 per cent of all change initiatives fail.” Beer & Nohria

Information Technology – “It is the remarkable ubiquity of the failure of ICT projects – particularly large ICT projects – and the large sums of money that can disappear as a result that should be of most concern.” Gauld & Goldfinch.

Infrastructure investments – “At the same time as many more and much larger infrastructure projects are being proposed and built around the world, it is becoming clear that many such projects have strikingly poor performance records”. Flyvbjerg et al

Business process reengineering – “reengineering efforts had failure rates as high as 70% and one source estimated that 85% of reengineering projects failed.” Pfeffer & Sutton.

Mergers and Acquisitions – “70% to 80% of acquisitions fail, meaning they create no wealth for the shareholders of the acquiring company. Most often, in fact, they destroy wealth” Seldon & Colvin.

Furthermore, there’s little evidence that things are improving significantly – research in Australia by Capability Management found, “The success ratio of projects has not increased in 15 years”; and the PMI’s 2014 Pulse of the Profession® report noted, “Change initiatives are time consuming and costly, significantly impacting an organization’s drive toward success. And nearly half of them fail.” With regard to megaprojects, Flyvbjerg (2014) concludes that, “overruns have stayed high and constant for the 70-year period for which comparable data exist…Similarly, benefit shortfalls of up to 50% are also common and above 50% not uncommon, again with no signs of improvements over time and geography.”

A number of questions arise from this:

Firstly, how accurate is the picture painted of consistent and continuing failure?

Secondly, what do we mean by failure?

Thirdly, what are the main causes of failure? and

Fourthly, what can we do to address the issue?

I’ll briefly address the first three, before focusing in more detail on the actions we should take, and specifically, I’ll argue for a portfolio investment management approach based on disciplined, but ‘fast and frugal’ decision-making.

Steve Jenner is author of, and chief examiner for, APMG’s ‘Managing Benefits™’ (TSO, 2nd Edition, 2014) and is also the co-author of the OGC’s (now Axelos) ‘Management of Portfolios’ (TSO, 2011). The approach to portfolio and benefits management that Steve developed in CJS IT was recognized internationally and won the 2007 Civil Service Financial Management Award. He is a regular speaker at international conferences, trainer and writer on the subjects of portfolio and benefits management – in addition to ‘Managing Benefits’ and ‘Management of Portfolios’, he is the author of, ‘Realizing Benefits from Government ICT investment – A fool’s errand?’ (2011, Academic publishing) and, ‘Transforming Government and Public Services – realizing benefits through Project Portfolio Management’ (2010, Gower). He is also one of the contributing authors of, ‘Project Portfolio Management – A View from the Management Trenches’ published by Wiley in October 2009 and sponsored by the PMI. Most recently he has contributed the benefits management chapter to ‘The Effective Change Manager’s Handbook’ (Kogan Page, 2014).

Steve is a professionally qualified management accountant and a Fellow of the Association for Project Management (APM) in the UK. Steve also holds an MBA and Masters of Studies degree from Cambridge University. Steve is currently working as a Corporate Educator at QUTs Graduate Business School in Brisbane, Australia. He can be contacted via www.stephenjenner.com.

Share the post "Why do projects ‘fail’ and more to the point what can we do about it? The case for disciplined, ‘fast and frugal’ decision-making"

Outsourcing became a usual practice for organizations which seek rapid business transformation, neglecting the consequences in long term duration. The case study of this paper is a complex project, where decisions to outsource irrationally lead to increase cost, potential risks and conflicts between outsourcing partners significantly, which lead to low project performance and coordination difficulties.

The purpose of this study is to explore the key factors to effectively managing the coordination mechanisms between more than hundred and eighty external service providers and a main contractor of a complex of four residential towers project “Complex1”, in addition, to focus on the significance of decision-making process prior to outsource.

This paper develops an approach built on sharing information, building trust and commitment, and managing interdependencies, it examines the coordination mechanisms in “Complex1” and the success or failure of the outsourcing decision via conducting a questionnaire-based survey among the outsourcing partners.

Moreover, the study argues that based on “Resource Based View Theory”, organizations may consider implementing a decision-making process to choose outsourcing as a procurement strategy for their projects, rather than deciding irrationally based on short-term benefits. Hence, it proposes an approach for the decision-making process of outsourcing developed from the literature by emphasizing on make-or-buy analysis.

The framework attempts to guide decision makers to gain the competitive advantage of outsourcing, moreover, to guide project managers to avoid potential risks and achieve the required mutual goals in quality, innovation and customer satisfaction.

Introduction

(Grover et al., 1994) Defined Outsourcing as requesting a service from external service provider. (Lankford & Parsa, 2006) Also defined Outsourcing as “The procurement of services from sources that are outside of the organization which generally involves the relocation of operational control to the external service provider”. In the other hand, (Weil & Dalton, 1992) defined complex projects as vulnerable to project performance issues, which projects tend to be “complex” due to multiple changes in design stages, procurement, testing and construction and other sequence activities involved.

Moreover, it is changing in customer requirements and project performance in terms of schedule, time and cost, in addition of the delays in discovering rework.

Outsourcing, which is called in the literature “Contracting-Out”, “Strategic Partnering”, or “External Service Provider”, nowadays became a fashionable strategy for organizations which seek a rapid business transformation in short-term duration (Linder et al., 2002).

Ramaz S. Issa is a Civil Engineer, is studying for a Master of Science degree in project management at the British University in Dubai, and is a PMP candidate. Ramaz S. Issa is a Civil Project Engineer at Gulf Technical Construction Company, a Drake & Scull International PJSC Company in Dubai, UAE. He has participated in managing three multi-million dollar projects which include, complex of four residential buildings, container terminal works building package that includes offices & various Industrial buildings, and four stars hotel. Ramaz earned his bachelor’s degree in civil engineering from the University of Sharjah and aims to finish his MS degree in project management from the British University in Dubai in 2016.

Projects are currently characterized by their complexity, size and intensified multiparty involvement. It is therefore difficult to meet between company’s and contractor’s expectations in terms of project objectives. Using different types of contracts, contractors may have different view that is reflected from their price.

In EPC contract that uses a concept of lump sum contract, price submitted by contractor is a promise of each contractor to deliver the project. Contractor will then face risk in executing the project, while in the same time they will have its potential return.

This paper describes behaviour of contractors in submitting price as part of bidding process using CAPM concept. It mathematically proves that risk and return will be going to the same way, e.g. high risk may have high return. It concludes that the price heavily relies on contractor’s experience and risk profile.

We have known that there is a strong relationship between risk and return, e.g. high risk will normally have high return, and low risk will normally have low return. The question then, how can we mathematically prove such a relationship? Particularly in the EPC bidding process where bidders (contractors) have to come up with the price after getting project’s scope of work, it is interesting to understand the bidder’s behaviour in seeing the project’s risk and translating it into the price as well as their potential return.

CAPM is a model from finance discipline that discusses about the capital market, company’s value and company’s cost of capital. In addition, it can be used to explore the optimum combination of an investment among portfolio of stocks and a risk-free asset. It has therefore become one of important finance models describing the relationship between risk and return. Hence, we will use CAPM theory to analyse the contractor’s price in the EPC bidding process.

Contract and Bidding Process

Contract

A contract between company and contractor represents a mutually binding agreement including its terms and conditions which obligates contractor to provide something of value (e.g., specified products, services, or results) to company, and the company to compensate monetary or other valuable thing to the contractor (PMI, 2013). It can be simple or complex reflecting the simplicity or complexity of the deliverables or required efforts.

There are two main types of contract, i.e. fixed price and cost reimbursable contract.

Trian Hendro Asmoro is an oil and gas professional with more than 8 years of experience in project management and cost engineering areas; from conceptual to executing projects as planning & cost engineer, pipeline project leader, project site engineer, and project coordinator. He is currently a senior cost engineer at PT Medco E&P Indonesia. Trian holds a bachelor degree in Industrial Engineering from the Institute of Technology Bandung (ITB), and a Magister Management (MM) in Strategic Finance from University of Paramadina, Indonesia. Trian is a Certified Cost Engineer/Professional (CCE/CCP) and Project Management Professional (PMP). He has published several professional papers in journals covering topics of project management, cost engineering and petroleum economics. He is now living in Aberdeen, Scotland, United Kingdom, pursuing his MSc in Petroleum, Energy Economics and Finance at the University of Aberdeen, supported by Indonesia Endowment Fund for Education (LPDP scholarship) of Indonesian Government. He can be contacted at [email protected]